Credit Card Fraud and EMV in the News

Luke Grant

Luke Grant, Product Manager, Payment

As the issue with credit card fraud in the U.S. increases, we continue see more coverage in mainstream media around the need for greater payment security. On May 27th, The Today Show on NBC released the latest in their series titled “Hackers of America”. The report focused on how easy it is for hackers to steal the cardholder’s information from a magnetic stripe and use it to create fraudulent mag-stripe cards. Tom Costello noted in his interview with James Lyne, Head of Security Research at Sophos, that EMV is “the next step” towards solving this problem.

 

As awareness of this problem grows, we’ve seen various stakeholders in the payments industry continue to support a rapid rollout of EMV in the U.S. In my last C-Store Advisor Blog, EMV Liability Shift Dates Standing Firm, I commented on recent statements made by the major card associations about their commitment to hold the current liability shift dates in October 2015 (in-store POS) and October 2017 (Automated Fuel Dispensers) in order to incentivize the market to adopt EMV technology.

We’ve also seen new evidence that financial institutions are accelerating the deployment of chip-enabled credit and debit cards to the U.S. market. A report released on May 4th from The Payment Security Task Force indicated that 63% of total cards in the U.S. would be chip-enabled by the end of 2015. This projection has increased from 54% of total cards in a similar poll of card issuers conducted in August of 2014. This equates to approximately 150 million more EMV cards in the market this year than previously predicted.

On the merchant side, predictions continue to show that approximately 47% of POS terminals will be EMV ready by the end of 2015. Chris McWilton, MasterCard’s president of North America markets, stated in the PST press release, “These numbers show real movement from plans to action as issuers, merchants and others in the payments system engage collaboratively to bring chip cards to the U.S.”

The full benefits of EMV in the U.S. will ultimately be realized when chip cards and terminals become ubiquitous. Until that point is reached, we’ll continue to see fraudsters shift their focus to the path of least resistance, which could have significant implications for the petroleum industry as we have two additional years to roll out EMV at the pump. The faster we can get our industry upgraded, the faster we can close the door on fraudulent credit cards and card skimming.

Additional Information:
For additional resources on the EMV migration to the US and its impact on our industry, please see:

  1. Gilbarco’s EMV informational web-page
  2. Previous Gilbarco blog posts on EMV:
    1. September 2011 – VISA announces EMV roadmap to the United States
    2. February 2012 – Another “Chip” Falls – MasterCard Follows Visa’s EMV Lead
    3. December 2012 – EMV Migration to the U.S. – What Convenience Store Retailers Need to Know
    4. March 2014 – Creating an ROI to the EMV Migration
    5. May 2014 – EMV – The Horse is Out of the Barn
    6. August 2014 – Broad Retail Moving to EMV in the U.S.
    7. September 2014 – Recent Data Breaches Highlight the Need for EMV
    8. November 2014 – Fraud at the Pump – How EMV Can Eliminate “Pump and Dump” Schemes
    9. January 2015 – EMV Made Easy – How the Consumer Experience Will Change
    10. March 2015 – Have My Chip – Now Where’s My PIN?
    11. April 2015 – EMV Liability Shift Dates Standing Firm
  3. Product Opportunities to create an ROI from the EMV Migration
  4. EMV Migration Forum – Knowledge Center

EMV Liability Shift Dates Standing Firm

Product Manager, Payment

We’re now less than 6 months away from the October liability shift that is driving merchants and card issuers to deploy EMV-enabled point-of-sale systems and EMV chip cards respectively.  A big question on everyone’s mind as this date draws closer is whether the major card associations will maintain the current liability shift dates, or delay them to provide more time to get new cards and terminals into the market.  What we’ve continued to see is a strong commitment from the card associations to hold their dates in order to continue incentivizing a rapid adoption of EMV to help stem the growing problem of fraud in the U.S.

On April 21st in the Discover Financial Q1 Earnings Report call, Chairman and CEO David Nelms fielded a question about delays in the October 2015 liability shift date.  Nelms responded, “I think that it’s important that we all try to hit the October date.  This has been a long time in the works; it’s been a date that was set quite some time ago.  And as an industry, we know we need to do something to better control security and fraud losses.”  He continued, “And I think it’s in the merchants’ best interests to try to get there just — if anything, more than it is for the issuers, when you look at some of the breaches that have happened.”  This is certainly an important point for merchants, because as EMV becomes ubiquitous, the motivation for fraudsters to attempt network breaches goes down as their ability to make counterfeit cards with the stolen data is eliminated.

In a previous C-Store Advisor Blog, “EMV – The Horse is Out of the Barn”, Parker Burke referenced similar statements from executives at both MasterCard and Visa.  The overall sentiment is that fraudsters are not slowing down their efforts to capitalize on the last major market to adopt EMV technology, and that any delay in the U.S. EMV migration would only worsen the problem of counterfeit fraud.

Visa is further supporting a rapid adoption of EMV by taking their message on the road in the U.S. to help small businesses and consumers understand EMV and the benefits of chip technology.  Visa kicked off its 20-city Small Business Chip Education Tour in Austin, TX in March.  Kim Lawrence, senior vice president of Corporate Initiatives at Visa, said in the news release, “Chip education and adoption is critical, because as of October 1, 2015, liability for counterfeit fraud on Visa chip card accounts will shift from the chip card issuer to business owners who have not upgraded to chip-activated terminals.”

As we continue to see a reaffirmation of the established liability shift dates, it becomes increasingly important for petroleum retailers who have not started their EMV upgrades to begin making plans today, both for their in-store POS as well as at their dispensers.

Additional Information:

For additional resources on the EMV migration to the US and its impact on our industry, please see:

  1. Gilbarco’s EMV informational web-page
  2. Previous Gilbarco blog posts on EMV:
    1. September 2011 – VISA announces EMV roadmap to the United States
    2. February 2012 – Another “Chip” Falls – MasterCard Follows Visa’s EMV Lead
    3. December 2012 – EMV Migration to the United States – What Convenience Store Retailers Need to Know
    4. March 2014 – Creating an ROI to the EMV Migration
    5. May 2014 – EMV – The Horse is Out of the Barn
    6. August 2014 – Broad Retail Moving to EMV in the U.S.
    7. September 2014 – Recent Data Breaches Highlight the Need for EMV
    8. November 2014 – Fraud at the Pump – How EMV Can Eliminate “Pump and Dump” Schemes
    9. January 2015 – EMV Made Easy – How the Consumer Experience Will Change
    10. March 2015 – Have My Chip – Now Where’s My PIN?
  3. Product Opportunities to create an ROI from the EMV Migration
  4. EMV Migration Forum – Knowledge Center

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